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Friday, July 10, 2009

Labels Must Become Managers
By, Bob Lefsetz

The vaunted 360 deal is basically a land grab. Challenged financially, major
labels are forcing acts to fork over interests in ancillary rights, most notably
touring and merchandise, and delivering almost nothing in return. The future
company will have in-house or subcontracted companies that deliver these
services. What was seen as a label today will be a quarterback tomorrow.

This is why Guy Hands is so stupid.

Guy Hands can only see capital. There's an asset, primarily EMI's catalog. How
can he maximize revenue from this, at the same time breaking new acts cheaply.
But no one wants to sign with a label that's cash-poor, with few employees.
Musicians want a full service stop. And that's Irving's play.

Irving wants to turn the business upside down. He wants to put all the power in
the hands of the acts. The press is focusing on ticketing fees. That's like
analyzing the Iraq war based on the food shipped to the troops. It's an
important consideration, but not the essence.

At risk in the Ticketmaster/Live Nation merger is not Seth Hurwitz and the other
independent promoters, nor the ignorant ticket-buyer who doesn't realize that
all the best seats are NEVER available, but the labels. If this merger goes
through, the labels will become second-class citizens essentially overnight.
Sure, Irving will do a deal with Interscope or Sony or...whoever ponies up a ton
of bread. And believe me, the labels will pay, they need talent for their
pipelines. Which is why they should shut down and become licensing companies.
Because the path they are on is one of destruction.

In order to compete with Irving, you've got to become Irving, you've got to
become a manager!

Sure, you need marketing and promotion people. But what you need most is
vision, of a team that is in business with the act, that shares in the upside
and is not guaranteed compensation. Right now, the label and the act are
adversaries. If the act hits, the label gets rich and the act becomes famous.
In addition to this fame, you used to be able to make bread on the road. Now
the label wants a piece of that! Not an attractive deal.

But what if the label took a percentage. And had a merch company. As for being
the agent, there is a finicky California law, but there are ways to get around
it. Yes, labels must be reconstituted, as opposed to being fat cats they must
be headed by people like Irving, Cliff Burnstein and the myriad of indie
managers like Bruce Allen and Gary Borman.

That goes for indie labels too. If all you're doing is putting out records,
you've got me scratching my head. If you need to make the band's manager a
partner, so be it. You've got to have all the rights to make this work. In
order to be nimble, in order to make a profit.

Terry McBride had the theories right, he was just too early and sans enough hit
acts. Furthermore, how happy can an act be if its manager is flying around the
world playing the role of star himself?

Rather than being forces of nature, heads of labels/managers must be relatively
faceless. To the average Metallica fan, Cliff Burnstein is a credit on the
album. He's not making pronouncements. Even Irving is not grubbing for
publicity. The act is the star, not the handler!

We've got to move away from the record being the prime driver. This does not
mean music should be free, but sometimes it has to be, to help spread the word.

A new partnership would look like the one Trent Reznor has with Jim Guerinot.
There's no need for a traditional label.

But not every act is a visionary like Trent. So you've got to stock your
company with people who can provide these services, everything from iPhone apps
to exotic online marketing initiatives. You must invest money, managers always
do, but there cannot be a huge advance and the act cannot be screwed.

This is where we are going. Are you smart enough to get on the bus?

Visit the archive: http://lefsetz.com/wordpress/
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